April 12, 2010, 7:58 AM — Way back in February of 2009 I wrote a post about Blockbuster's plans to start renting video games by mail. That was the last I heard of the program, and with Blockbuster's on-going struggles to stay afloat I assumed they'd just given up on the idea.
It seems I was wrong, because over the weekend talk of Blockbuster's "Games by Mail" program (as it is now called) hit the headlines again. According to a post at Joystiq, Blockbuster is testing the system now in Cleveland, OH with the intention of rolling it out nationwide by the end of the year. The cost has increased a bit since February 2009; now Blockbuster say it'll cost an additional $7.99 plus tax for every month you rent a game, and games count against your disk total. So if you're on a 3-disk plan and have a game out, you can only have two movies out at the same time. Blockbuster has a FAQ page up about the program that includes a lot more details, including the rather confusing terms for taking a game back to a Blockbuster store (if you can find one these days).
This is an interested move on Blockbuster's part. The company is competing against Netflix in the "by mail" market and against RedBox in the brick & mortar space, and not doing well. At the same time Gamefly, the only big "games by mail" service in the US (yes, I know there are a lot of smaller options out there), doesn't have a great distribution network, making turn-around times problematic in certain parts of the country. If Blockbuster could do a better job than Gamefly does, this might be a niche they could win in. Gamefly charges $22.95/month for a 2-at-a-time membership. Blockbuster charges $13.99 for 2-movies-at-a-time, plus the $7.99 Games by Mail surcharge for a total of $21.98/month. If Blockbuster can provide better service than Gamefly does, it could lure a lot of gamers over to its service.
Blockbuster doesn't have to worry about Netflix in this space; speaking to The Consumerist, Netflix's VP of Corporate Communications Steve Swasey said Netflix has no interest in getting into game rentals due to their short shelf life. The technology in games moves forward so fast that there is little interest (except among true enthusiasts) in gaming titles from a few years back, while that isn't the case with movies (according to Swasey). Gamefly deals with this issue by selling off its older inventory to its customers, and presumably Blockbuster would do the same thing and might even sell them via its brick and mortar stores. Of course Netflix could do the same if it chose too, but Netflix's big focus these days seems to be towards streaming media.